by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to be close to balance on Thursday while the session will be marked by numerous macroeconomic indicators, including monthly inflation figures in the United States, a statistic likely to confirm or alleviate market fears of a postponement of the timetable for the first rate cut by the American Federal Reserve (Fed).

Index futures suggest an increase of 0.12% for the CAC 40 in Paris at the opening, which would bring it a little closer to the 8,000 point mark. The Dax in Frankfurt, which recorded a record session on Wednesday, could gain 0.03%. A slight rebound of 0.12% is expected on the FTSE 100 in London. The EuroStoxx 50 could gain 0.02%.

Among the avalanche of today’s statistics, investors will especially have their eyes riveted on the monthly PCE price index in the United States, expected at 1:30 p.m. GMT, accelerating by 0.3% over one month in January but decelerating by 2.4% over one year.

In the euro zone, while waiting for the inflation figures expected on Friday, Germany, the bloc’s largest economy, will give an overview of the dynamics of price developments in February from 09:00 GMT with data collected in several Länder before the national indicator due at 1:00 p.m. GMT. Monthly French and Spanish inflation figures are also due this Thursday.

The data is important as traders now expect the Fed to cut rates by around 80 basis points this year, half the figure expected at the end of 2023, according to CME Group’s FedWatch barometer.

In the euro zone, money markets are now only counting on a drop of around 90 basis points in rates from the European Central Bank (ECB) this year, compared to 150 points anticipated just a month ago.

In addition to inflation, retail sales and unemployment in Germany, French domestic product (GDP), American household income and spending, are all statistics on the agenda.

The session should also be animated by company results, notably in France with those of Air France-KLM, Atos, Veolia and Saint Gobain and in Europe, those of IAG and LSEG.

VALUES TO FOLLOW IN EUROPE:

A WALL STREET

The New York Stock Exchange ended lower on Wednesday, on the eve of the publication of an inflation indicator closely monitored by the Fed.

The Dow Jones index fell 0.06%, or 23.39 points, to 38,949.02 points.

The broader S&P-500 lost 8.42 points, or 0.17%, to 5,069.76 points.

The Nasdaq Composite fell 87.56 points (0.55%) to 15,947.738 points.

“Any sign of a resurgence in inflation will certainly be taken very seriously by the markets,” warned Keith Buchanan, portfolio manager at Globalt Investments.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index fell 0.11% to 39,166.19 points, while the broader Topix gained 0.03% to 2,675.73 points at the close. Investors have essentially opted for profit taking after the recent record highs in the indices.

SoftBank Group, the biggest decliner on the Nikkei, lost 1.67% and Kyocera dropped 1.03%.

In mainland China, the CSI 300 rebounded after a drop of 1.27% on Wednesday, gaining 1.03%. Over the month as a whole, it shows a gain of 8.3% at this stage, which would allow it to put an end to six consecutive months of decline. The Shanghai SSE Composite advances by 0.89%.

The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) gained 0.06%.

EXCHANGES/RATES

The dollar fell slightly (-0.06%) on Thursday against a basket of reference currencies, including the euro which stood at 1.0834 dollars.

The Japanese currency strengthened, by 0.54%, to 149.86 yen per dollar. Hajime Takata, a member of the board of governors of the Bank of Japan (BoJ), said the central bank should consider a review of its ultra-accommodative monetary policy, including an exit from negative interest rates and a relinquishment of control of the fluctuation in bond yields.

In cryptocurrencies, bitcoin increased further, by 4.63%, to $63,365 after having come close to the $64,000 mark the day before, a first since November 2021.

On the bond market, the ten-year US Treasury bond yield is almost stable, at 4.2757%.

OIL

The oil market is almost unchanged before the publication of US inflation, but investors fear a drop in demand for crude if the Fed’s high interest rates continue.

Brent dropped 0.05% to $83.64 per barrel and American light crude (West Texas Intermediate, WTI) nibbled 0.01% to $78.55.

(Writing by Claude Chendjou, edited by Kate Entringer)

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